Smart grids integrate information technology, decision support systems, communication networks, and sensing technologies. All these components cooperate to facilitate dynamic power adjustments based on received client consumption reports. Although this brings forth energy efficiency, the transmission of sensitive data over the public internet exposes these networks to numerous attacks. To this end, numerous security solutions have been presented recently. Most of these techniques deploy conventional cryptographic systems such as public key infrastructure, blockchains, and physically unclonable functions that have either performance or security issues. In this paper, a fairly efficient authentication scheme is developed and analyzed. Its formal security analysis is carried out using the Burrows–Abadi–Needham (BAN) logic, which shows that the session key negotiated is provably secure. We also execute a semantic security analysis of this protocol to demonstrate that it can resist typical smart grid attacks such as privileged insider, guessing, eavesdropping, and ephemeral secret leakages. Moreover, it has the lowest amount of computation costs and relatively lower communication overheads as well as storage costs.